CNB Adjusts GDP Growth Estimates

Prague, Feb 1 (CTK) – The Czech National Bank (CNB) improved its GDP growth estimate in a new forecast, made public today, to 3.6 percent for this year from 3.4 percent predicted in November, and for next year to 3.2 percent from the previous estimate of 3.1 percent, CNB governor Jiri Rusnok said.


For last year, the central bank left its economic growth estimate unchanged at 4.7 percent, Rusnok told journalists after a policy meeting of the CNB’s governing board.


He said the new forecast actually sees space for one more rate hike this year, however, even this hike will be conditioned by further development and other circumstances, Rusnok said.


He pointed out he said earlier he was in favour of two rate increases this year.


The CNB downgraded its inflation estimate to 1.9 percent in Q1 next year, while in November it predicted a 2 percent inflation rate. For Q2 next year, the estimate stayed unchanged at 1.8 percent.


“Overall inflation will stay above the 2 percent target, being a touch below it in the monetary policy horizon,” Rusnok said.


Risks to the estimated development are balanced, he said. Domestic inflation pressures and the exchange rate of the crown may pose a risk to a possible growth or fall of inflation.


The new forecast is consistent with a growth in domestic market interest rates this year and mainly in 2019. This year’s hike will be slowed by the European Central Bank’s monetary policy.


In a new forecast, released on Wednesday, the Finance Ministry improved its estimate of this year’s economic growth to 3.4 percent and of 2017’s GDP growth to 4.3 percent, envisaging economic expansion at 2.6 percent in 2019.


Last week, the Czech Banking Association upgraded its GDP growth estimate to 3.3 percent for this year, predicting a growth of 2.9 percent for next year.